Record high sales for ON agencies, suppliers, thanks to strong industry - and consolidation

Record high sales for ON agencies, suppliers, thanks to strong industry – and consolidation

This story originally ran in the July 12th, 2018 issue of Travelweek magazine. To get Travelweek delivered to your agency for free, subscribe here.

TORONTO — Ten years ago there were more than 3,000 retailer and wholesaler registrants on TICO’s roster. Now there are just 2,359. But the industry isn’t losing steam, not by a long shot.

The travel industry here had one of its best years ever, buoyed by record high gross sales by Ontario registrants, according to TICO’s latest stats from travel agencies and suppliers.

“The travel agent’s business model will change but there’s a value and a service that they provide that will always be needed,” even if margins are ever-tight, says TICO President and CEO Richard Smart.

The industry, particularly on the retail side with 2,023 registrants, continues to contract and consolidate as larger players buy up smaller players. It’s a downsizing trend that’s been playing out for years.

And while some agency owners are putting their agencies up for sale, or retiring from the industry entirely, new entrants looking to break into the business were writing a record number of TICO exams. Some 66,000 TICO exams, required for anyone aiming to sell travel in Ontario, have been written since 2010, says Smart. It’s a growing number. “A record number of TICO exams were written in 2017,” he adds. While taking the exam will be as far as some people get, nevertheless “there are a lot of people coming into the industry.”

At TICO’s recent 2018 AGM, registrants got an update on the Compensation Fund, now sitting at just under $22 million. That’s up more than $1 million from the year before. It’s a lot of money but nowhere near the $50 million needed to keep the Fund viable, according to a Deloitte report. The 2017 study said that if the Ontario travel industry’s Compensation Fund continues to be depleted at the current rate, it won’t be able to sustain itself in 10-15 years.

Even $50 million is nowhere near Quebec’s fund (FICAV), now topping $138 million. Quebec’s $5 million wholesaler fund was depleted when Canada 3000 went belly up back in 2001, and that’s when the Quebec travel industry lobbied for – and got – a consumer-pay model. The rate started off at $3.50 per $1,000 in travel purchased, then scaled down to $1 per $1,000.

The Quebec fund is so high it’s unwieldy. But Quebec’s consumer-pay model is clearly working, and the Ontario travel industry has long advocated for something similar.

There was nothing about a consumer-pay model in Bill 166, also known as the Strengthening Consumer Protection for Ontario Consumers Act, 2017. Bill 166 became law in December 2017, subsequent to the addition of Ontario Regulation 26 – 5, which TICO is now working on. The Regulation will be shared with registrants for input later this year.

The timing of the recent Ontario provincial election wasn’t in the consumer co-pay model’s favour. What would-be premier wants to campaign on a platform that includes new fees?

The good news is, the government is very aware of the consumer co-pay model. “It’s on the radar with the government and they say they will continue to look at it,” says Smart.

“It’s all about strengthening consumer protection.”

Travellers are getting the message to book through a TICO-registered travel agency, and that’s part of the reason claims on the Fund are at an all-time low. And not only are consumers more aware, “but registrants are very compliant with the regulations,” says Smart. “I always say that 95% of our registrants are good hard-working business people. TICO registrants are following the rules, and they’re our ambassadors.”

For its part TICO is administering the rules “as effectively as we can,” adds Smart.

One of the more high-profile convictions in recent TICO history is the MKI Travel and Conference Management case.

Last fall MKI director and former ACTA President and Algonquin Travel founder Ron Greenwood was found guilty of two counts of failing to prevent MKI from committing an offence of failing to deposit trust funds into the trust account, and one count of failing to prevent MKI from committing an offence of failing to obtain the Registrar’s consent in advance of opening a second trust account.

Ottawa-based MKI was a registered travel agent and wholesaler under the Act whose registration was voluntarily terminated effective in May 2013. The Fund paid a claim in excess of $2 million related to the closure of MKI, the largest single claim ever against the Fund.

Greenwood was sentenced to 18 months jail for each of the three convictions (served concurrently), and to pay restitution in the amount of $2,036,933 to the Fund.

“We followed that one through to the bitter end,” said Smart. “And we got the conviction that we expected.”

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